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Conflicts, breaches at Vic water agency

The Victorian government water agency continually breached government policies and handled conflicts of interest poorly, the ombudsman says.

The underlying attitude at the Office of Living Victoria (OLV) seemed to put procedures and principles second to urgency, Ombudsman Deborah Glass found.

An ombudsman's report said this led to breaches of public service employment principles, poor contract and project management, the use of exemptions to avoid competition, limited or no risk management and poor planning.

In one instance three companies provided OLV with quotes for an event, at $40,000, $60,000 and $160,000.

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OLV accepted the highest quote with no explanation, the report found.

The report concluded that there was an ongoing failure by OLV to comply with government procurement policies and conflicts of interest were poorly handled.

"From the earliest days of OLV, the inclination and focus have been on the end, not the means," the report said.

Ms Glass said the prevailing attitude at the office had been that it needed to "crash through" a bureaucracy that would stymie effective and timely change.

"Poorly managed conflicts of interest fundamentally undermine the integrity of public policy."

Water Minister Peter Walsh said mistakes were made in the running of the agency but the government had changed how it was administered.

"We would acknowledge that both mistakes have been made around the OLV and Department of Environment and Primary Industries and these are being addressed," Mr Walsh told reporters, before the report was tabled in parliament on Tuesday.

"Changes have been made to the administration of OLV."

The agency is now being run out of the Department of Environment and Primary Industries.

Deputy Opposition Leader James Merlino said OLV had been a mess.

"To talk generally, it has been an unmitigated failure of Peter Walsh," Mr Merlino told reporters, before the report's official release.

"The office of living it up Victoria, jobs for mates. Absolute rorting. This has been a mess."

The ombudsman investigated the OLV after a whistleblower made a complaint about its procurement and contract management practices last June.

Mr Walsh said the government would implement all of the ombudsman's four recommendations, including auditing OLV's finance management.

"The Victorian Coalition government expects government departments, including administrative offices, to adhere to Victorian government policies with respect to purchase of goods and services," Mr Walsh said.

He said the agency and the department were working to restore good governance.